assets, poverty traps and rights usaid seminar series: natural resource management and poverty...
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Assets, Poverty Traps and Rights
USAID Seminar Series: Natural Resource Management
and Poverty Reduction
Chris BarrettCornell University
December 9, 2004Washington, DC
Asset-Based Poverty Assets underpin the generation of
income and self-insurance against adverse shocks
… the foundation of livelihoods
Five main types, 0/w three key for the poor:
1) Financial
2) Human
3) Natural
4) Physical
5) Social
Evolving Views of Poverty
Successive generations of poverty analysis1st: static income/expenditure analysis
(headcount, poverty gap, FGT measures)
2nd: dynamic income/expenditure analysis (chronic/transitory poverty distinction)
3rd: static asset poverty analysis(structural/stochastic poverty distinction)
Asset-Based View of Poverty
Figure 1 Single Period Income and Asset Poverty Lines
)(ˆ Au
A A A
Pov Line, u
Assets
Uti
lity
Asset Poverty Line
)(ˆ Au
B
C
)(ˆ Au
ũ(A)
Source: Carter and Barrett (2004)
An Emerging 4th Generation View
Stable, dynamic equilibrium (SDE) below asset poverty line … a “poverty trap”
Commonly, multiple SDE with locally increasing returns and nonlinear asset dynamics … investment, natural dynamics and shocks matter a great deal
Fractal patterns – can exist
at multiple scales
The Possibility of Poverty Traps
From Carter and Barrett (2004)
The Poverty Trap
The Critical Dynamic Asset Poverty Threshold
At=A0 (dynamic equilibrium)
AL
Static Asset Poverty Line
Dynamic Asset Poverty Line
A*HA*L A*
UtilityFigure 3: The Dynamic Asset Poverty Line
A
Income Poverty Line
Initial Assets
L1
L2
Next Period’s Assets
U*H
U*L
Relevanceto NRM
S-shaped natural asset dynamics standard:- biological recruitment (livestock, wildlife, forests)- soil nutrient depletion/repletion
(shifting cultivation, transhumance)
Agriculture embodies asset portfolio rebalancing: NRM practices, harvests, etc. exchange natural – human – financial – social capital constantly.
Multiple equilibria in managing commons: meso-scale (geographic) poverty traps due to coordination problems (land, water, forest, wildlife, pests)
Relevance to NRM
NRM is an investment choice – crucial to reducing rural poverty as well as to conservation - Five “ins”: Investment depends on incentives, institutions, information and infrastructure(Barrett, Place and Aboud 2002)
Inherent complementarity of different types of assets and among the “ins”
Relevance to NRM
Cautionary tale of market-based conservation and development in Morocco’s argan forest
Rights matter to
- Access to and control over natural assets
- Ability to defend against asset loss (asset stripping, raiding)
- Incentive to invest in natural asset growth (tree planting, SWC structures, fallowing)
… shifts the dynamic asset poverty line
- Propensity to mis-/over-use of resources
- Enforcing rules: 2nd order public good
Rights and Poverty Dynamics
Natural Resources and The Poverty Reduction Challenge
Context-specific, multi-dimensional asset thresholds that separate growth / decline … natural assets are especially crucial for rural poor
Climbing out of poverty traps and keeping the non-poor out of poverty traps requires:
- increase productivity of assets (markets/technologies)
- facilitate asset building and protection (cargo/safety nets)
- remove exclusionary mechanisms (finance/social networks/rights systems)
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